Gambling Mentality Rages On

[LC]

I don’t know when it will happen but I have a pretty large cash balance waiting to be invested. Maybe this year, maybe next year, I don’t know, but most valuations seem pretty rich.

[Ballinvarosig Investors]

Justin Sun, the 30-year-old crypto entrepreneur who bought $10 million worth of GameStop Corp.

...

The GameStop position is now worth just $2 million, Sun said.

...

“I think I’m going to hold. Even if I lose money on the GME stock, I still believe this is a paradigm shift,” Sun said in an interview with Bloomberg Television.

Wow.

[RVP]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

This needs to be re-labeled "Sponsored Content: The Paradigm Shift, brought to you by [insert marketing co here]".

[KFS]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

 

I would give almost anything to have been a fly on the wall during this guy's charity lunch with Buffett.  I can only imagine Warren's reaction.  ;D  ;D

 

We are living through an amazing era.  I just have to believe this "meme culture" philosophy will go down in history books and new versions of books like "a short history of financial euphoria" for future generations to study. 

 

 

 

 

 

 

 

 

[spartansaver]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

 

I would give almost anything to have been a fly on the wall during this guy's charity lunch with Buffett.  I can only imagine Warren's reaction.  ;D  ;D

 

We are living through an amazing era.  I just have to believe this "meme culture" philosophy will go down in history books and new versions of books like "a short history of financial euphoria" for future generations to study.

 

I've reread a short history twice in the past couple months. Trying to keep my head level.

[rkbabang]

This whole episode makes me thankful for the existence of a professionally managed CPP in Canada.

 

Sure, people may have their gripes about CPP (and them running ads), but at the end of the day having CPP as a backstop protects investors against themselves doing stupid stuff like investing in meme stocks.

 

Totally agree!  If everyone was left to their own devices, we would have utter chaos! 

 

I'll be 52 in July, and even after everything I've saved and invested, I wonder if it is still enough.  I also know that the majority of people my age and those heading into retirement have a fraction of what I have saved.  Without CPP, universal healthcare, medicare, etc., there is no way they would be able to live a retirement life with any dignity. 

 

Cheers!

 

I admit upfront that know very little about the situation in Canada, but I have a neighbor who was was an executive at velcro in Canada (he's now retired), he worked in Canada most of his career and his wife is Canadian.  He worked the last 10 years of his working life in the US though.  He's in his late 70s now and said that he'd love to move back to Canada, but he could never afford to live there because of the taxes.  He claims that his standard of living would have to decrease substantially if he went back there, so he remains in New Hampshire.  This seems to contradict what you are saying.

 

[drzola]

Only about 7/8 ( Dunning Kreuger Effect maybe?)of Canadian Executives our forced and or choose  to live in Greater TO / Ottawa/ Montreal/ and Vancouver and surrounding area now it appears. Mny reside in Winnipeg/Edmonton/ and more recently Calgary once again it appears. So, where you choose to retire can change in Canada can be quite reasonable in rural AB/SK/MB and or Atlantic Canada.

[adesigar]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

You also have to consider that the US government has said they will be sending out $1400 and possibly giving $3000+ per child in the next year. For a family of 4 that could be 1400x4=5600 + 6000 = $11,600. Fed has said it wont raise rates till 2023. That could keep the market going into next year.

[shamelesscloner]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

You also have to consider that the US government has said they will be sending out $1400 and possibly giving $3000+ per child in the next year. For a family of 4 that could be 1400x4=5600 + 6000 = $11,600. Fed has said it wont raise rates till 2023. That could keep the market going into next year.

 

I need to make more babies

[mattee2264]

 

It is definitely a speculative and momentum driven market which is usually a dangerous sign. But the problem is that this time the Fed and the government instead of taking away the punch bowl are refilling it to the brim. The Fed in particular is determined not to allow the market to crash and through its policies is encouraging investors to lever up and take on more and more risk and allocate even more to equities and that is creating an unprecedented level of moral hazard.

 

Of course the rationale used by the Fed and the government is that with low interest rates and inflation nowhere to be seen the usual constraints on economic policy do not exist. And inflation is actually quite desirable given the high levels of debt in the world. And you'd expect with the "too much is better than too little" mantra this argument will get pushed to its natural limits (whatever they are) but you'd imagine this policy experiment still has quite a few years to run and with it the bull market.

 

There will probably be a market correction at some point so to that extent we may be approaching a top. But I think we could be a long way from the actual top of this market.

[fareastwarriors]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

You also have to consider that the US government has said they will be sending out $1400 and possibly giving $3000+ per child in the next year. For a family of 4 that could be 1400x4=5600 + 6000 = $11,600. Fed has said it wont raise rates till 2023. That could keep the market going into next year.

 

I need to make more babies

 

Yeah, not worth it lol

 

[rkbabang]

 

It is definitely a speculative and momentum driven market which is usually a dangerous sign. But the problem is that this time the Fed and the government instead of taking away the punch bowl are refilling it to the brim. The Fed in particular is determined not to allow the market to crash and through its policies is encouraging investors to lever up and take on more and more risk and allocate even more to equities and that is creating an unprecedented level of moral hazard.

 

Of course the rationale used by the Fed and the government is that with low interest rates and inflation nowhere to be seen the usual constraints on economic policy do not exist. And inflation is actually quite desirable given the high levels of debt in the world. And you'd expect with the "too much is better than too little" mantra this argument will get pushed to its natural limits (whatever they are) but you'd imagine this policy experiment still has quite a few years to run and with it the bull market.

 

There will probably be a market correction at some point so to that extent we may be approaching a top. But I think we could be a long way from the actual top of this market.

 

The question is:  Is this 2000 or 1998?

 

[DooDiligence]

I'm calling a market correction some time this year!  After reading this article, I'm pretty sure we are getting near a top.  I would also rename this article, "The Man No One Will Remember in 5 Years!"  Cheers!

 

https://finance.yahoo.com/news/crypto-mogul-bets-meme-investing-220000958.html

 

 

I would give almost anything to have been a fly on the wall during this guy's charity lunch with Buffett.  I can only imagine Warren's reaction.  ;D  ;D

 

We are living through an amazing era.  I just have to believe this "meme culture" philosophy will go down in history books and new versions of books like "a short history of financial euphoria" for future generations to study.

 

This is what the fly saw.

 

[longtermdave]

Does anyone know if Grantham was ever as specific on timing the market top as he is this time around? From what I've heard in a few interviews, he's putting the top in a few months to sometime in the summer. Was he ever that specific in 2007 or 2000? If so, did he get the timing right?

[mattee2264]

 

Grantham is basing his views on crazy investor behaviour which I agree suggests we are closer to 2000 than 1998.

 

Problem is he underestimates the ability of the Fed and the government to keep this going. Zero interest rates were bad enough with their TINA implication and encouragement of the use of leverage and financial engineering by companies (e.g. share buybacks). But now we have the government giving unlimited handouts to people who really don't need the money and have figured out they can make handsome returns by investing it in the stock market. And so long as the virus lingers around there are limited options for spending so a higher saving rate should continue to support higher share prices.

 

Ultimately Grantham's argument is that economic forces result in an eventual reversion to mean. But we are no longer in a free market economy.

[Fly]

 

Grantham is basing his views on crazy investor behaviour which I agree suggests we are closer to 2000 than 1998.

 

Problem is he underestimates the ability of the Fed and the government to keep this going. Zero interest rates were bad enough with their TINA implication and encouragement of the use of leverage and financial engineering by companies (e.g. share buybacks). But now we have the government giving unlimited handouts to people who really don't need the money and have figured out they can make handsome returns by investing it in the stock market. And so long as the virus lingers around there are limited options for spending so a higher saving rate should continue to support higher share prices.

 

Ultimately Grantham's argument is that economic forces result in an eventual reversion to mean. But we are no longer in a free market economy.

 

Agree with this. I mean, how far of a jump are we from UBI becoming reality?

[Guest]

We haven't been in a "free market" economy in over 90 years. And certainly not since the early 80s (ie big deficits to promote "growth").

 

[adesigar]

The question is:  Is this 2000 or 1998?

 

That's the exact question I have been asking myself. I moved to 20% cash middle of last year which now seems like a bad move since the market just kept going higher.

 

I keep reading about the Buffett indicator being at record highs (194% or something) but the Fed keeps buying and is at approx. 8T, the 2017 Tax Cuts are not accounted for in the indicator and the GDP is temporarily affected by COVID. 

 

Maybe its 1999.

 

 

[shamelesscloner]

Does anyone know if Grantham was ever as specific on timing the market top as he is this time around? From what I've heard in a few interviews, he's putting the top in a few months to sometime in the summer. Was he ever that specific in 2007 or 2000? If so, did he get the timing right?

 

I like what Pabrai says about trying to time the market... micro trumps macro. Market timing is a speculator's activity. Much better to spend our time hunting for great businesses.

[mattee2264]

 

Problem is Yellen and Powell are milking this no-fault recession for as much as it is worth. Both use a desire for full employment as an excuse for excessive stimulus. But government handouts do little for work incentives or job creation. And zero interest rates have done little to encourage productive investment and by keeping zombie companies alive prevent a healthy process of structural adjustment in the economy.

 

[jobyts]

 

Problem is Yellen and Powell are milking this no-fault recession for as much as it is worth. Both use a desire for full employment as an excuse for excessive stimulus. But government handouts do little for work incentives or job creation. And zero interest rates have done little to encourage productive investment and by keeping zombie companies alive prevent a healthy process of structural adjustment in the economy.

 

Could it be the case that they are trying to prevent the scenario that, if the interest rate is raised in the US, US stock market collapses and some other country (which keeps the interest rate artificially low) gets the full benefit? Would we be okay if the US stock market crashes, and China accelerates its trajectory by a decade or two, to become the world's financial/GDP number one?

[Cigarbutt]

Before reading this thread I was considering adding to TLT, most of which I sold last Spring.  Suspect tomorrow I will.

Thanks

Lance

Hi Lance,

Even if your reasons appear different, it looks like we're on the same target again.

http://www.capitalspectator.com/wp-content/uploads/2021/02/t.5.nom_.real_.2021-02-09.png

To make a long story short, the consensus view seems to be that the recent divergence between real and nominal rates will be resolved by reflation.

Betting on TLT means (at least from a certain perspective) that one feels that inflation expectations will gravitate to an enduring trend in real rates.

A challenge here is that this is no longer a free market so the casino table may be rigged.

[bizaro86]

This whole episode makes me thankful for the existence of a professionally managed CPP in Canada.

 

Sure, people may have their gripes about CPP (and them running ads), but at the end of the day having CPP as a backstop protects investors against themselves doing stupid stuff like investing in meme stocks.

 

Totally agree!  If everyone was left to their own devices, we would have utter chaos! 

 

I'll be 52 in July, and even after everything I've saved and invested, I wonder if it is still enough.  I also know that the majority of people my age and those heading into retirement have a fraction of what I have saved.  Without CPP, universal healthcare, medicare, etc., there is no way they would be able to live a retirement life with any dignity. 

 

Cheers!

 

I admit upfront that know very little about the situation in Canada, but I have a neighbor who was was an executive at velcro in Canada (he's now retired), he worked in Canada most of his career and his wife is Canadian.  He worked the last 10 years of his working life in the US though.  He's in his late 70s now and said that he'd love to move back to Canada, but he could never afford to live there because of the taxes.  He claims that his standard of living would have to decrease substantially if he went back there, so he remains in New Hampshire.  This seems to contradict what you are saying.

 

As a rule of thumb, wealthy people are better off in the US and middle class and lower are better off in Canada. So your retired executive neighbour probably would pay extra to live in Canada, and Parsad's comment that the average person benefits greatly from the social safety net can both be true.

 

Every winter (it is currently -27C here) I consider moving to California. The breakeven point where the lower taxes cover the increased cost of healthcare (for a good plan for my specific family situation) is a bit over $150k US in income per year.

 

For lower tax states the breakeven would be lower, but probably still $100k+.

[ValueArb]

Bumble IPO today. Offering went out above the range and stock price finished up 76% on day.

 

CNBC says its a $7B market cap, my math is $13B. So either 14 times sales or 24 times sales, coming off a loss for the year.

[ValueArb]

I am building a bubble portfolio, that I have puts against. Am hoping to add to it, should Bumble be next (up $10 today but no options yet, darn it).

 

SPCE -Virgin Galactic

TSLA - Tesla

NKLA - Nikola